Details/Trends HSBC US Business

Besides the fact that they have written down billions i i think the most interesting part are the details on the US part of their business (especially on loan modifications ). Their acquisition of Household five years ago was probably one of their worst investments ever.... At least they can easily weather the storm without diluting shareholders (thanks to their Asian exposure ) . The following presentation gives a nice overview of Details HSBC US Business and is hinting there is much more pain to come......

Abgesehen von den erneueten Mrdabschreibungen an die man sich inzwischen gewöhnt hat ist es hilfreich einen Blick auf die Details des problembeladenen US Geschäfts von HSBC zu werfen ( besonder interesaant das Tempo der Kreditmodifikation ).... Kein schöner Anblick...... Der Kauf von Household in den USA vor 5 Jahren war rückblickend wohl der schlechteste Kauf in der ruhmreichen Geschichte von HSBC. Nichtsdestotrotz wird HSBC auch dank der starken asiatischen Wurzeln diesen Sturm wohl ohne eine größere Verwässerung der Aktionäre überbrücken können. Die nachfolgende Präsentation gibt einen schönen Überblick über das Details HSBC US Business und verdeutlicht das hier sicher noch mehr an Abschreibungen kommen wird.....

HSBC Statement
Our pre-tax profits in North America declined significantly against the same period last year, adversely affected by higher loan impairment charges in the US consumer finance business and further write-downs in Global Banking and Markets. These losses were partly offset by gains reported on HSBC's own debt held at fair value.

Loan impairment charges in the US consumer finance business were US$3.2 billion, significantly higher than the US$1.6 billion recorded in the first quarter of 2007 but notably less than the US$4.6 billion recorded in the fourth quarter of 2007, in part reflecting seasonal trends.

It seems likely that the deterioration in the US housing market will extend into 2009; it is also clear that US economic growth has slowed and there is an increased likelihood of a recession this year. Against this economic backdrop, we continued to experience higher delinquencies across our major lending portfolios, though these were broadly in line with our expectations at the end of 2007.

The vast majority of our mortgage customers continue to meet their commitments. At 31 March 2008, 5.0 per cent of mortgages in our US branch-based consumer lending business were two months or more overdue, compared with 4.2 per cent at 31 December 2007. The equivalent figures for our mortgage services business were 12.5 per cent and 11.2 per cent, respectively. This trend of rising delinquency ratios will continue as balances continue to be run off.

Reported delinquency percentages in our credit and private label card products were also affected by the weakening US economy, as well as by a shift in product mix, portfolio seasoning and lower origination balances. The latter was the result of action taken to curtail lending growth. At the end of the quarter, the two months or more delinquency rate for credit cards was 5.9 per cent and 3.6 per cent for private label cards, compared with 5.8 per cent and 3.4 per cent, respectively, at the end of 2007.

We have continued to take positive action to mitigate, where appropriate, the effects of the housing market decline on our customers. In the first quarter of 2008, we modified about 1,500 loans with an aggregate balance of approximately US$270 million ahead of their adjustable-rate mortgage ('ARM') resets; this brings the total number of loans modified to around 11,900 and the aggregate balance to some US$1.9 billion.

> At the end of 2007 they had $35.4 billion in residential mortgages outstanding.

> Ende 2007 hatte HSBC 35,4 Mrd $ an Hypotheken in den Büchern.

As market conditions pointed to an extended housing market decline, we began to offer, selectively, some longer term modifications, generally providing assistance for either two or five years.

surprise, surprise....HSBC to Boost Loan-Loss Provisions on Bad Mortgages

what a surprise........ just look at mortgage implode meter http://mortgageimplode.com/ and you can see on a daily basis that the party is over. or read more at the label on the bottom of the post

was ne überraschung..... braucht euch die verlinkte seit oben anzusehen um zu erkennen das die party vorbei ist.......oder unter den labeln

Feb. 8 (Bloomberg) -- HSBC Holdings Plc, Europe's biggest bank, said it's setting aside 20 percent more than analysts estimated for loan losses in 2006 because the company's U.S. mortgage business is deteriorating.

Home loans to risky borrowers in the U.S. are going bad faster than HSBC expected just two months ago.....

HSBC's $15.5 billion purchase of Household International Inc. in 2003, which initially helped it boost profit as U.S. house prices soared, is now eroding earnings as defaults jump. Home loans to borrowers with poor credit ratings or large debt burdens are defaulting at a faster rate than during the U.S. recession six years ago.....

HSBC said analysts had expected $8.8 billion in loan-loss provisions for 2006, based on the average of 11 estimates gathered by the bank. A 20 percent increase would bring provisions to $10.56 billion, more than the $8.7 billion HSBC earned in the first half.

Sub-Prime Rates
The stock has fallen 7.2 percent since Nov. 13, when HSBC first said bad debts in the U.S. were rising, making it the third- worst performer on Hong Kong's benchmark Hang Seng Index. All other banking stocks on the index rose in the period. ...... isn´t ironic that countrwide and wells fargo have outperformed the well diversified hsbc with business all over the world. cfc and wfc are only focussed in the us and on top of that mainly in the mortgage business................komisch das hsbc schlchter als countrywide und wells fargo abgeschnitten haben die im gegensatz zu hsbc nur in den usa tätig sind............


New Century, HSBC's largest competitor for so-called sub-prime mortgages, said yesterday it expects a fourth-quarter loss in part because of a jump in defaults on new loans. here is the shocking reality on new century (i think a must read) http://immobilienblasen.blogspot.com/2007/02/endgame-for-new-century-new.html


`Further Weakness'
``The impact of slowing house price growth is being reflected in accelerated delinquency trends across the U.S. sub-prime mortgage market,'' HSBC said in the statement. ``It is clear that the level of loan-impairment provisions to be accounted for as at the end of 2006 in respect of Mortgage Services operations will be higher than is reflected in current market estimates.''

Mortgage Bankruptcies
Irvine, California-based New Century also is restating earnings for the first nine months of 2006 and delaying the release of fourth-quarter results.

disclosure: short cfc, new